Bitcoin News, Analysis, Interviews and Features

BTER bounces back

Tuesday 17 March 2015

BTER has taken a beating recently. Back in the summer they experienced a massive hack that could have finished them. This year, on February 14, an even worse episode occurred. It seemed there was no coming back - but BTER has pulled a rabbit out of the hat again. The question is, will it convince customers to return?

Hacked exchange BTER is back up and running. It’s the second major disaster for BTER, and this time they had to be considerably more creative than six months ago, when they were hacked for a sum of 50 million NXT. That time, they paid 400 BTC to regain the coins, worth some $1.7 million. Like most alts, NXT isn’t nearly as liquid as bitcoin, and the hacker evidently preferred a currency he could move, mix and sell easily. This time, 7,170 BTC was hacked - worth $1.75 million at the time - and there was no trade to make. Barring some miracle of detective work, the money is gone.

It could have been curtains for BTER, but the exchange has more lives than a cat. Their recovery strategy was to enlist the help of Jua.com - a security firm that also owns a vast bitcoin mining operation. Jua offered BTER a 1,000 BTC interest-free loan to help pay back customers and recommence trading. They will also be taking on all the security of the site’s wallets - something at which BTER have historically not proven adept. In the NXT hack, 6 months ago, the coins were stolen from the hot wallet - at the time, there was no cold NXT wallet. This time, the 7,170 BTC were stolen from their so-called cold wallet. Clearly, definitions of ‘cold’ vary somewhat, since a properly set up cold wallet should be completely untouchable.

BTER will be paying back customers their balances gradually, spending all their revenues on this until the job is done. To keep track of their accounts, they have created a new token, BTC_B, representing promissory notes for the bitcoins that were stolen from their wallet.

It’s going to be a long road. BTER owes its customers a huge sum of money. Trust is a commodity that is hard to gain in crypto, and easy to burn. Two major hacks should have destroyed the confidence they had built up, as the largest and most popular altcoin exchange in the world. But they have appeared to buy back their shattered reputation, with a promise of full restoration and zero fees for a month.

Many customers have vowed never to return to BTER. Others are willing to give them the benefit of the doubt, thanks to their work to make customers whole.